Zcash Proof of Stake Megathread 🧵

First of all, I want to thank @nathan-at-least for openly and honestly publishing the full range of directions and questions. I have already expressed a number of my thoughts on Twitter. I admit that in some places I was off the scale, but I deleted everything superfluous and unconstructive. In the end, he himself asked me to speak on this article and I should have understood that all this was written for the purpose of open discussion. However, I have a false confidence that when ECC publishes material, this is already a solved issue. But this is not true, and we have witnessed an open discussion earlier in each of the cases. Moreover, we even saw a reasonable rejection of the concept of premature implementation of ZSA, due to potential threats to network security. Perhaps this is an incorrect distortion of my perception of people whom I consider my authorities.

So, in continuation of my thoughts on this article.

The article says that the target setting is that any non-zero balance (> $1) will receive a reward. I believe this poses a security risk to the current emissions model in which there is an emissions cap.
I will try to direct my thought. The advantages of this proposal are obvious to everyone: maximum decentralization, maximum equality between participants. Of course, this will clearly become a popular offer among community members. However, let’s think about why the Ethereum network chose 32 coins as a base for validators. Not at all because it created additional demand for ETH. Vitalik basically doesn’t care about the price of the coin - everyone could note that. The fact is that equidistant remuneration in some aspect is not a market competition for the right of a validator and can cause a long-term security threat. Especially in the case of Zcash for the period when the issue will be close to the end. If we consider the PoW emission in bitcoin, then I do not need to explain that everything in this algorithm is focused on the fiercest competition for the right to find a block. The whole industry developed on this competition. Billions of dollars annually. However, it seems to me that if we create conditions in which everyone can receive remuneration in proportion to their balance in accordance with the total remuneration from the commission (PoS), then at the end of the emission cycle this remuneration (received exclusively from commissions in the network) will be so small that the incentive for all such validators will not be enough to maintain network security. In the case of PoW, the reward is distributed among the mining participants. If the reward is not enough (due to a drop in price), the market distributes it itself - some participants leave the process of finding a block, the most effective participants remain, but the holders do not influence these processes. Incentives are redistributed by the market. If there is a lack of incentive from PoS validators, the coin will rather lose value in the eyes of small holders and instead of holding you will get a sale with a hyperbolic drop in incentives from the smallest holders to the largest. However, in the case when it is necessary to accumulate some balance for validation, the remuneration will be redistributed exclusively among these participants. The specific weight of the remuneration will be sufficient for any price scenarios and the amount will be valuable in itself, since it gives the holder an exclusive right to remuneration. Such a network will be slightly less decentralized, but more resistant to price shocks and for a period when the issue will be significantly reduced.

In fact, what is written above is a secondary question. And all I’m worried about is maintaining a strict issue limit of 21 million coins, while maintaining incentives to maintain network security.